Insurance companies in India offer multiple car insurance plans that cater to the particular needs of the buyers. But selecting the right policy can be challenging. In India, insurance companies have various plans with varied attributes. Your car insurance comes with two components - ‘third party and ‘own damage’. ‘Third-party’ encompasses any injury incurred by a third party because of the accident while the ‘own damage’ component ensures the damage or injury suffered by your car. Are both these premiums fixed or can you make them more effective? With respect to third-party liability, the premium is fixed and the cover is mandatory. With respect to the own damage insurance premium, you can bring it down by customizing your cover.
Here are Six simple ways to make your car insurance more cost-effective.
1:Get ‘pay as you drive’ insurance
This has been available in the Indian auto industry available since 2020. It has been governed by the regulatory sandbox policies of Irdai and is allowed to be marketed only by a few insurers. This pay as you drive is an offering based on usage. The insurer charges a premium only for the number of kilometers fixed at the policy’s inception. The insured gets the same benefits as in a traditional comprehensive cover. So, you will be able to cut down on the premium if you drive sometimes.
A No-Claim Bonus or NCB is a premium way to save on your motor insurance premium. It provides you with a discount on your premium for every claim-free year. This happens on renewal with no claims. As per the regulations, you are eligible for up to 20% discount on your first year of no claims, 25% for two years, 35% for three, and 45% for 4 subsequent years with no claims.
But, you must renew your policy within 3 months of the policy expiry date, so that you do not lose the entire NCB by making a claim even for a small amount. Always pay out of your pocket for small damages rather than making a claim. Additionally, in case you are buying a new vehicle by selling off the old one or porting your policy to a new insurer, always remember to transfer your no-claim bonus.
Before you choose a particular insurer, do a thorough research online on the various insurance premiums offered by different insurance companies. Insurance premiums may differ across motor insurance policies and also with the premiums they provide. However, if a policy has more features and covers, the premium automatically increases.
Ensure that you read the fine print of the policy carefully before choosing it as it may have particulars about any hidden charges. Also, online distribution channels are more cost-effective than conventional ones. They bring down your premium also. It is also good to check critical facets like the claim settlement ratio of different insurers as it has a direct impact on your policy.
4:Assess Voluntary Deductions
Voluntary deductions are the sum you are required to pay when there is an accident. If your voluntary deduction is nil, then you shall receive the entire claim amount when there is an accident. However, if your policy lays down a specific amount towards voluntary deduction, then that is the amount you will have to pay. The insurer will pay the balance amount in case of an accident. The higher the voluntary deduction, the lower your car insurance premium is. However, when it comes to voluntary deductions, you must carefully assess the possibilities.
5:Assess your Need: TPI Vs Own damage cover
The covid pandemic has made remote work normal, and this is the time when you need to assess your insurance needs. Third-party insurance is mandatory, so you cannot avoid purchasing it. However, you need to determine if you want to buy your own damage cover according to the utility.
For new car owners, the law has made a 1 year comprehensive +3 year TPI policy compulsory while purchasing a car. This means the customer only has to purchase a standalone own damage policy (SAOD) for the second and third years. However, if you have an old car that you do not use often, a third-party cover is enough. For small damages, the cost paid out of pocket might be less compared to the comprehensive policy’s premium.
6:Timely Payment of Premiums and Renewal of Policy
Being regular in your premium payments and renewing the policy within the specified time will cut down on the cost of car insurance premiums. If you default on premium repayments, the insurer may consider this as a risk and increase the premium amount. If you allow your policy to lapse, you will lose out on the important advantage- your gained NCB. Also, you will have to go through the assessment process again and based on your vehicle’s condition, the insurer might raise the amount.
All people work hard to earn a living and we know the value of each penny earned. An average person has to take care of multiple expenses, such as groceries, transportation, bills, school fees of their children, payment of EMIs on their loans, medical expenses, insurance premiums, etc. Car insurance premiums like any other insurance premium can bring in a cut in your monthly budget, but it is really important to ensure your safety and vehicle. However, you can adopt simple ways to cut down on your car insurance premium. The above mentioned simple ways will be useful for you.
FAQS Six Simple Ways To Make Your Car Insurance More Cost-Effective
1:What are the five things you can do to lower the cost of your insurance?
The 5 ways to lower the cost of your insurance are:
- Review your policy coverage. Examine your policies annually, because prices can change annually.
- Review your deductibles
- Make home improvements
- Discontinue extra coverage
- Ask for discounts
2:What are the factors that impact the cost of automobile insurance?
- Age. Age is a very important factor, especially for young drivers.
- Driving history is a very clear rating factor
- Credit score.
- Driving experience in years
- Insurance history
- Annual mileage